Optimal divisibility when money is costly to produce

Manjong Lee and Neil Wallace ()

Review of Economic Dynamics, 2006, vol. 9, issue 3, 541-556

Abstract: There is wide agreement that currency was not available in conveniently small denominations prior to the 19th century. Here, estimates of the costs of providing and maintaining money (coins) in 15th century Europe and parameterized versions of a matching model of money are used to find the optimal degree of divisibility. Although the optima are sensitive to the specification of the matching model, the optimal sizes we find agree in order of magnitude with the sizes of the most common coins in 15th century Europe. (Copyright: Elsevier)

Keywords: Divisibility of currency; Matching model; Coinage in the fifteenth century (search for similar items in EconPapers)
JEL-codes: E40 E42 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (10)

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DOI: 10.1016/j.red.2006.05.001

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